2007 (9) TMI 67 - HC - Central Excise

Cenvat credit availed on inputs Captive consumption of machines for manufacture of goods on job work& duty was paid only by Principal manufacturer - Inputs used in mfg. of parts, which are intermediate products are eligible for credit even if such parts are cleared without payment of duty

Summary

Issues:
1. Challenge to the order of the Customs, Central Excise and Service Tax Appellate Tribunal
2. Availing benefit of Cenvat credit on inputs for manufacturing machines
3. Utilization of Cenvat credit for clearance of excisable goods without separate accounts
4. Alleged contravention of Central Excise Rules and Cenvat Credit Rules
5. Show cause notice issuance and adjudication leading to duty demands
6. Appeal before First Appellate Authority and subsequent challenge before Appellate Tribunal
7. Substantial questions of law framed for appeal
8. Arguments regarding validity of Appellate Tribunal's order
9. Interpretation of relevant legal provisions by both parties
10. Justification of Tribunal's decision by respondent's counsel
11. Conclusions reached by the High Court

Analysis:

1. The High Court of Karnataka reviewed the challenge brought by the revenue against the order of the Customs, Central Excise and Service Tax Appellate Tribunal. The Tribunal's decision in Appeal No. EW/43/2005 was questioned by the revenue by framing substantial questions of law and seeking to set aside the Tribunal's order based on various legal contentions.

2. The case involved M/s. Bharath Fritz Werner Limited, manufacturers of CNC machines availing Cenvat credit on inputs. The revenue alleged that the company capitalized certain machineries for job work, leading to clearance without payment of Central Excise Duty. The revenue contended that the company contravened Central Excise Rules and Cenvat Credit Rules by misdeclaring facts and utilizing irregular credit for duty payment on final products.

3. A show cause notice was issued, and duty demands were confirmed by the Additional Commissioner of Central Excise. The First Appellate Authority upheld the assessment order, but the Appellate Tribunal set it aside, leading to the revenue's appeal with substantial questions of law framing.

4. The Senior Counsel for the revenue argued against the Tribunal's order, citing errors in law and non-compliance with relevant rules. The issue of entitlement to Modvat/Cenvat credit contrary to specific rules was raised, emphasizing the alleged misuse of exemptions and irregular credit availed by the assessee.

5. The respondent's counsel justified the Tribunal's decision, referencing legal precedents and interpretations. The counsel rebutted the revenue's arguments by citing Supreme Court judgments and contending that the Tribunal's conclusions were valid and in line with legal provisions.

6. The High Court concurred with the Tribunal's decision, finding no grounds for interference with the assessment order against the respondent. The appeal was dismissed based on the Court's agreement with the Tribunal's conclusions, thereby upholding the decision in favor of the respondent.